Agenda Item No. 8
CITY COUNCIL STAFF REPORT
TO: Honorable Mayor and City Council DATE: October 23, 2023 FROM: Matthew Bronson, City Manager
PREPARED BY: Deanne Purcell, Administrative Services Director SUBJECT: Proposition 218 Noticing Process for a Hearing on Proposed Water and Wastewater Rates
RECOMMENDATION
Approve a new Proposition 218 noticing process for holding a public hearing on December 11, 2023 on proposed water and wastewater rates.
BACKGROUND:
On September 5, 2023, the Council received a Utility Rate Study and preliminary findings and recommendations for increases to water and wastewater rates. On September 25, 2023, Council received and filed the final report of the Utility Rate Study and approved implementing the Proposition 218 noticing process for holding a public hearing on the proposed water and wastewater rate structure on November 13, 2023.
Staff subsequently issued Proposition 218 notices to all utility account holders in English and Spanish, per Council direction, on September 27. However, notices are required for both account holders and property owners of record under Proposition 218 and staff has determined that property owners were inadvertently not included with this noticing process. Therefore, staff recommends the Council approve a new Proposition 218 noticing process for holding a public hearing on December 11, 2023 to ensure compliance with the requirements of Proposition 218.
Notices will be provided in English and Spanish. For any protests that have been received before the second noticing process, staff will send specific information, along with self-addressed, stamped envelopes to resubmit protests to be counted toward the total number of protests.
FISCAL IMPACT
Resending Proposition 218 notices will cost approximately $8,000 from the operating budgets of the Water and Wastewater Enterprise Funds.
ALTERNATIVES
The Council has the following alternatives to consider:
1. Approve a Proposition 218 noticing process for holding a public hearing on December 11, 2023 on proposed water and wastewater rates; or
2. Do not approve a Proposition 218 noticing process for holding a public hearing on December 11, 2023 on proposed water and wastewater rates Staff Report: Proposition 218 Noticing Process for Water and Wastewater Rates Page 2 October 23, 2023
3. Provide alternative direction to staff.
PUBLIC NOTIFICATION
The agenda was posted in accordance with the Brown Act.
Attachments
1. Proposition 218 Notice
1 NOTICE TO PROPERTY OWNERS OF PUBLIC HEARING
REGARDING PROPOSED WATER AND WASTEWATER RATES
Hearing Date & Time: December 11, 2023 6:00 PM
Hearing Loca�on: City Hall
154 South 8th Street, Grover Beach, CA 93433
Why are you receiving this notice?
The City of Grover Beach (City) is mailing this no�ce to you because you are a water and/or wastewater customer or are the owner of record of a property that receives water or wastewater service. This no�ce describes proposed changes to the water and wastewater rates and gives informa�on about a public hearing to be held on December 11, 2023 at the City Hall, 154 South 8th Street, Grover Beach, CA, 93433 regarding these proposed changes.
What do water and wastewater rates fund?
The City provides water and wastewater service to residen�al, landscape, and commercial customers. Monthly rates charged to system users (customers) on a bi-monthly basis are the primary source of revenue to operate the water and wastewater systems and are used solely for this purpose. Rate revenue provides funding for annual opera�ng and maintenance costs, capital projects to improve water and wastewater infrastructure, administra�on, and maintaining adequate fund reserves and planning for con�ngencies.
Y
In order to maintain a high level of water quality and ensure adequate supply, several water system capital projects are proposed to be supported by your water payments that include the: Central Coast Blue Water Sustainability Project; Reservoir Maintenance; Automated Meter Reading; Water Meter Replacements; Booster Sta�on upgrades, and other projects. Capital projects that are supported by your wastewater payments include the: sewer upgrades for both future and exis�ng flows, Fronts Street Li� Sta�on Upgrades, South Oak Park Li� Sta�on Upgrades; System Repairs; and Citywide Sewer Lining projects.
New Drought-Resistant Water Supply: Central Coast Blue Water Sustainability Project Central Coast Blue is a regional water sustainability project that will create a new, high-quality, and drought-resistant water supply for Grover Bech, Pismo Beach, and Arroyo Grande. These communi�es are designing and building a new advanced water purifica�on facility that willsupplement local groundwater supplies. The Advanced Treatment Facility will treat water from the City of Pismo Beach's Wastewater Treatment Plant to produce purified water that will be injected into the groundwater basin to supplement the natural groundwater supply and to create a seawater intrusion barrier. The project allows these communi�es to have sufficient water supplies even in �mes of drought.
Central Coast Blue will enhance local supply reliability and help protect the communi�es from droughts by diversifying supply sources and avoiding excessive reliance on any one source of water. This project also reduces the amount of treatment plant effluent to the ocean by 74%. For more informa�on, visit www.centralcoastblue.com.
Maintaining Sustainable Water and Wastewater Systems
Water and wastewater rates support the overall financial plans for water and wastewater. These financial plans account for increasing opera�ng expenses, including support for rising personnel costs, electricity, chemicals, and purchased water (Lopez Lake water). The financial plans also include ensuring adequate reserves and debt service coverage ra�os. 2 Why are rate increases needed?
Current rates do not provide adequate funding for long-term opera�on and maintenance expenses and capital projects.
The City engaged a consultant to perform studies of the City’s water and wastewater funds, and to recommend user rates designed to meet the City’s financial obliga�ons, including opera�ng and debt service costs, funds for needed capital projects, and maintenance of cash reserves. The rate structures developed in the studies comply with federal, state, and City laws and guidelines. They are consistent with good industry prac�ces and are equitable among the City’s customer classes. At the City Council Mee�ng on October 23, 2023, the report on these studies was presented which included recommended u�lity rates through January of 2028. The City Council reviewed the report and approved the proposed rate schedule to be considered at a public hearing on December 11, 2023.
The proposed rates are based on a comprehensive u�lity rate study and financial plan to ensure reliable and func�onal water and wastewater systems. The City will annually review revenues and expenditures for the water and wastewater funds to ensure that sufficient and appropriate revenues are collected to effec�vely provide for the short and long-term service needs of the community. The rate study report providing the rate development methodology is available at City Hall and on the City’s website at www.groverbeach.org.
New rates
In order to provide necessary funding to operate and carry out long-term improvements of the water and wastewater systems, the City is proposing to implement new rates as a series of annual revenue adjustments over the next five years.
The following tables summarize the proposed water and wastewater rates.
Water Current and Proposed Monthly Fixed Charges
Current Proposed
Rate Jan 1, 2024 Jan 1, 2025 Jan 1, 2026 Jan 1, 2027 Jan 1, 2028 Residential
Meter Size Fixed Charge ($ per month)
5/8" $16.47 $17.91 $21.44 $25.67 $30.73 $31.96
3/4" $16.47 $17.91 $21.44 $25.67 $30.73 $31.96
1" $16.47 $17.91 $21.44 $25.67 $30.73 $31.96
1.5" $54.85 $59.70 $71.47 $85.55 $102.41 $106.51
2" $87.80 $95.52 $114.34 $136.87 $163.84 $170.40
3" $175.61 $191.04 $228.68 $273.73 $327.66 $340.77
4" $274.55 $298.50 $357.31 $427.71 $511.97 $532.45
Non-Residential
Meter Size Fixed Charge ($ per month)
5/8" $16.47 $17.91 $21.44 $25.67 $30.73 $31.96
3/4" $24.71 $26.87 $32.17 $38.51 $46.10 $47.95
1" $27.52 $29.85 $35.74 $42.79 $51.22 $53.27
1.5" $54.85 $59.70 $71.47 $85.55 $102.41 $106.51
2" $87.80 $95.52 $114.34 $136.87 $163.84 $170.40
3" $175.61 $191.04 $228.68 $273.73 $327.66 $340.77
4" $274.55 $298.50 $357.31 $427.71 $511.97 $532.45
3 Water Current and Proposed Variable (Consump�on) Rates Wastewater Current and Proposed Monthly Charges
Impact on your bill
For the proposed rates effec�ve January 1, 2024, a typical single-family home that uses 15 Units* of water every two months, the water por�on of your bill would increase from $93.69 per billing cycle (every two months) currently to $120.37 per billing cycle or $13.34 more per month. The wastewater por�on of the bill would increase from $25.64 to $30.64 per billing cycle or $2.50 per month. The accompanying graph provides a summary of combined bills, exis�ng and proposed, for water and wastewater under three usage scenarios. The comparison includes wastewater charges from South San Luis Obispo County Sanita�on District as well as a 1.0% U�lity Tax applied to the water bill. The dark blue boxes represent the total increases by usage level. The City’s total u�lity rates are currently near or at the lowest rates in the county compared with other ci�es and would remain near the lowest countywide a�er the first-rate increase.
Current Proposed
Classification Rate Jan 1, 2024 Jan 1, 2025 Jan 1, 2026 Jan 1, 2027 Jan 1, 2028 Variable Charge ($ per HCF)
Residential
Tier 1 - 0 to 10 units $2.99 $4.20 $5.03 $6.03 $7.22 $7.51 Tier 2 - 11 to 22 units $6.17 $8.51 $10.19 $12.20 $14.61 $15.20 Tier 3 - Over 22 units $8.90 $11.91 $14.26 $17.07 $20.44 $21.26 Landscape $6.72 $9.11 $10.91 $13.06 $15.64 $16.27
All Other $6.47 $7.90 $9.46 $11.33 $13.57 $14.12
Current Proposed
Classification Charge Jan 1, 2024 Jan 1, 2025 Jan 1, 2026 Jan 1, 2027 Jan 1, 2028 Fixed Charge ($ per month)
Boarding House (per unit) $15.54 $18.57 $22.19 $26.52 $31.69 $32.96 Per Bedroom Charge 10.00 11.95 14.28 17.06 20.39 21.21
Car Washes & Laundromats (min charge) 6.19 7.40 8.84 10.56 12.62 13.12 Per 100 cubic feet above minimum 0.00 0.00 0.00 0.00 0.00 0.00 Church 15.06 18.00 21.51 25.70 30.71 31.94
Per parsonage or dwelling unit 12.82 15.32 18.31 21.88 26.15 27.20 Commercial Establishment (Public place up to 5 Fixtures) 15.04 17.97 21.47 25.66 30.66 31.89 Each additional fixture 4.12 4.92 5.88 7.03 8.40 8.74
Factories, Industrial Plants (20 employees or less) 10.12 12.09 14.45 17.27 20.64 21.47 Each additional employee over 20 1.16 1.39 1.66 1.98 2.37 2.46 Hotel, Motel Auto Court or Lodge (per unit) 15.45 18.46 22.06 26.36 31.50 32.76 Mobile Home (per space) 12.82 15.32 18.31 21.88 26.15 27.20 Restaurants (min charge) 2.14 2.56 3.06 3.66 4.37 4.54
Per 100 cubic feet against minimum 0.00 0.00 0.00 0.00 0.00 0.00 Schools (min annual charge per ADA and employee) 3.31 3.96 4.73 5.65 6.75 7.02 Schools with Cafeterias (additional) Per ADA and employees 1.38 1.65 1.97 2.35 2.81 2.92 Single-Family Dwelling Unit 12.82 15.32 18.31 21.88 26.15 27.20 Theater, Clubhouse or Place of Amusement 15.04 17.97 21.47 25.66 30.66 31.89 Travel Trailer and Recreation Vehicle Space 6.60 7.89 9.43 11.27 13.47 14.01 Multi-family, Two or More Dwellings (per unit) 12.82 15.32 18.31 21.88 26.15 27.20 Per each coin-operated washer 2.80 3.35 4.00 4.78 5.71 5.94 Excess Discharge per 100 cubic feet $0.40 $0.48 $0.57 $0.68 $0.81 $0.84 4 Example bill calcula�ons using proposed January 1, 2024 rates at 15 HCF (Units):
Water: .....................$17.91 Monthly ¾” Meter Base Charge X 2 Months + $4.20/HCF X 10 HCF +$8.51/HCF X 5 HCF = $120.37 City Wastewater:.....................................................$15.32 per Month per Dwelling Unit X 2 Months X 1 Dwelling Unit = $30.64 South San Luis Obispo County Sanitation District:........................................................... $25.48 per Month X 2 Months = $50.96
1.0% Utility Tax: ....................................................................................................................................................................... $1.20 Total: $203.17
How do you file a protest or participate in the public hearing? The City Council will consider the new rate structure and proposed revenue increase at a public hearing on Monday, December 11, 2023 at 6:00 p.m. at City Hall, 154 South 8th Street, Grover Beach, CA, 93433. You are invited to present oral or writen tes�mony at the public hearing.
Any registered property owner or customer of record of a parcel subject to the proposed rates may submit a writen protest against the proposed rate revisions. If writen protests are filed with respect to a majority of the affected property parcels, the proposed rate revisions will not be adopted. There will only be one protest allowed per parcel of property.
A writen protest must contain the street address or Assessor's Parcel Number (APN) for the parcel(s) with respect to which the protest is made. The protest must also be signed by the registered property owner or customer. Protests may be mailed 23or hand delivered to the City’s offices at 154 South 8th Street, Grover Beach, CA, 93433. Protests may also be delivered to the City Clerk at the public hearing. To be valid, a signed writen protest must be received by the City Clerk at or before the �me of the protest hearing.
The City previously sent a similar no�ce of a public hearing concerning these rates on or around September 27, 2023. Due to a distribu�on uncertainty, it was necessary to resubmit this no�ce to the public with a revised hearing date. If you $131.01 $147.47
$171.23
$203.17
$286.76
$359.57
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
Current 7 HCF Proposed 7 HCF Current 15 HCF Proposed 15 HCF Current 30 HCF Proposed 30 HCF $16.46
$31.94
$72.81
5 received the prior no�ce please disregard it as this no�ce will be the per�nent no�ce for compliance with submi�ng a protest. You will also be required to submit a new protest even if you previously submited one pursuant to the September 27, 2023 no�ce.
*1 Unit = 1 HCF, 1 HCF = 748 Gallons